Mathew Ryan

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5 Actions Dentists Should Take To Build A Retirement That Supports Their Lifestyle

Posted by Mathew Ryan on Mon, Feb 15, 2016

By Mat Ryan,
Financial Planner and Analyst, Four Quadrants Advisory

If you’re a successful Dentist, you should be able to retire with several million in savings, so you can continue the standard of living you have now. Unfortunately, most Dentists aren’t doing that according to an American Dental Association study. 

It concluded that the average income expected by the Dentist at retirement of 49% of current income – or $127,000 expected per year. We think this is a travesty!401KIRA_Egg.jpg

To put it bluntly: if you have at least $750,000 in collections each year, you don’t have an excuse: you should be saving more. You will need to have set aside $8 to $10 million for retirement in order to maintain the lifestyle you're living now. After all, why should you take a step back once you finally reach retirement?

Here are 5 actions you need to take this year to create a retirement that will support your current lifestyle:

1. Put the right savings plan in place
There are savings strategies that work well for some but are not adequate for Dentists. A Simple IRA doesn’t provide the kind of flexibility that a 401K or profit share plan does if you can afford to have one. If you do have one of these, discipline yourself to make regular contributions by setting up an automated paycheck deferral into your retirement account to fund it to the maximum amount by year’s end. And your spouse should be on the practice’s payroll as a front-office employee to maximize the amount of money you can contribute to the practice retirement plan.

To make sure you have more money available to save, you still have to think beyond even these savings instruments. For instance, do you have a $5,000 loan payment that’s about to end? Make a plan for what happens to that budgeted payment once it’s not going toward your loan anymore. You should re-invest it or put it into savings.

2. Skip budgeting - it's overrated
It’s complicated and time-consuming to plan a budget, and let’s face it, are you actually going to stick to it? The better strategy is to live within your means, save proactively, and try to increase the amount you save every year. And you need to invest that saved money properly. We recommend to every client a low-cost, no-commission environment; ideally fee-only one.

3. Run your practice efficiently 
There are two factors to balance to make your practice as efficient as possible. The first is your production. Why not set a goal to surpass last year’s revenue, and then sustainably grow from there?

The other is your overhead level: if it’s above 65% it’s killing your cash flow, and, as a result, your income and savings stream. For every 10% you lower your overhead drops, that means you bring in 10 cents more for every dollar you collect. So if you’re collecting $900,000 a year and you lower your overhead 10 percent, that’s $90,000 more to add to the bottom line.

4. Don't "Sweat the Small Stuff" especially regarding bank accounts
Balance (pun intended) is the key. By watching your cash reserves at home and work each month, you will find it easier to deal with unexpected expenses on both fronts. Remember what I just said about budgeting: live within your means, know how much you need and make sure you have enough at all times.

But too much is also unhealthy. If you have money just sitting in a bank account, it’s not working for you. Once you surpass the level of cash you need to have an adequate safety-net (we recommend 1-1.5 times the amount of monthly expenses) put that excess cash to work! If it’s in your practice account, take it home. If it’s at home, invest it.

5. Keep the cash flowing
This can be difficult given the unexpected challenges that confront dental practice owners such as yourself. But every business owner faces them. The key is responding to these curve balls in a way that doesn’t crunch your cash flow.

You might be so debt-averse that you pay for a new piece of equipment in cash. Inadequate tax management could lead to a big surprise and, therefore, IRS bill at tax time. Maybe your practice hit a slow patch last June and July. No matter the issue, your response must be educated to minimize the number of crunches you have to handle.

Ironically we recommend our clients “sweat the small stuff” because if you are managing details and stay on top of problems when they’re small, the bigger issues will either never materialize or be far less traumatic. Attention to detail will make your practice profitable over the long term, and will put you in a position to have that $10 million retirement – or at least more than you are on pace for now.

What's your plan for retireing the way you want to. If you don't have one, or would like us to review it, you can contact us directly at (877) 720-6213 or send us an e-mail so we can determine together the best place to begin.

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Topics: dental retirement

How Dentists Should – And Should Not – Invest

Posted by Mathew Ryan on Thu, Sep 10, 2015

By Mathew Ryan
Financial Planner / Analyst
Four Quadrants Advisory

The Stock Market’s performance of late looks a lot like my first and last ride on a roller coaster: nauseating. The fact that an unexpected move by China to manipulate its currency value can cause such market fluctuations only underscores following a strategy we’ve emphasized with our clients over and over again since Four Quadrants’ inception: stop chasing BIG returns!

I’ll be the first to admit, chasing such returns can be a hard temptation to resist. But there’s a direct correlation between increased risk and increased potential rate of return. Many dentists feel the pressure to make large sums quickly to try to build a floundering retirement plan. 

According to the American Dental Association, the average dentist only saves about 10% of their income – around $21,000. At that rate, many aren’t able to come anywhere close to meeting retirement goals. So to try to make up for it, they feel like they need to invest aggressively. As a result, many get bitten by risky investments that eventually turn south as many have during this recent market “correction.”

At Four Quadrants Advisory, we recommend a more conservative investment strategy that concentrates on building savings first. You don’t need to chase that high rate of return when your practice finances are structured so that you can save $100,000 a year. Make no mistake — this success does not come entirely from investing alone; having the ability to save more over time is a key component to success.  Without the ability to find this extra money for the savings, the cycle of winning some and losing more will continue for you.  

It all makes sense if you think about it: if you have more to invest, then you don’t have to rely so heavily on your returns.  This coupled with the concept of the time value of money and compounding of interest is a key tenet in the investing world. 

This concept stresses the importance of getting money invested sooner - as opposed to later - which will allow it to grow more quickly. This is also very significant when you consider that higher rates of returns come with a higher price of more risk—one of the primary laws of investing. 

Focus on what you can control – your savings, not market returns – and avoid exposing yourself to the unpredictable machinations of the stock market. In 2008’s financial crisis, those who were heavily invested in risky stocks lost between 30 and 40 percent of their value. Those who were more conservative in their investments lost much less.

You need a plan. You need a thorough plan, and you need it now. But how do you build a financial plan without years of training and experience? It’s not as hard as you think – with a little guidance. 

If this post raises some questions, fill out the form below, and we’ll get back to you quickly. You can also contact Brian Wilson, our Business Development representative, directly at (877) 720-6213 or

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You Probably Need to Hire A Dental CFO. Today.

Posted by Mathew Ryan on Wed, Jun 17, 2015

Do you remember why you became a dentist?CFO_Help_01

Was it simply to help people and be in the position to call your own shots?

Do you remember the day you realized running a dental practice was not something you learned in dental school?

It’s an admittedly overwhelming feeling that taught you quickly that being an entrepreneur is just as much part of the job as is being a dentist. While you may have mastered how to adjust a clasp on a partial denture without breaking it, financial independence has been hard to come by. “Why am I working so hard but not seeing the results I expected?" is another question you find yourself asking.

If your dental school buddy visited your office today they may see a practice that looks healthy. After all you’re making $300,000 a year while reinvesting in the practice with technology to streamline it and a have a beautiful office. Best of all, new patients always seem to be walking in the door! Sure your friend is impressed, but does your smile on the outside reflect the whispers behind closed doors?

Cash flow is tighter than you would like it to be — both for your practice and at home — and it’s keeping you up at night. Not to mention the worry that a tax surprise could hurt your cash flow even more. Add in the pains of growth, like hiring new staff, and it all might be getting to be too much. How can you juggle all of these areas while being a dentist, practice owner, and spouse/parent?

Quiet the Voices
These whispers of doubt are nothing new to established, and successful dentists. But oftentimes they flow from emotion and not reality. The pull from emotional decisions can be great. We’ve worked with enough dentists to know when the whispers become voices, it’s time for an external Chief Financial Officer to come aboard.

We’re not talking about yet another staff addition, rather an outsourced entity that can take your practice financial state from a self-perceived hot mess to purring engine. Having righted many practices over the 11+ years all over the country, we’ve created a predictable flow of cash to plug the financial leaks.

Predictable cash flow means you won’t have to check your bank account daily and be surprised at what you see – or terrified that you won’t have the cash to deal with what’s coming. Your cash flow at home will finally be consistent so you can begin to build your personal accounts and save more for retirement.

A CFO says “What you need to do over the next few months . . .” instead of, “What you should’ve done last quarter . . .” This means you’ll be free of the fear of cash flow concerns at home and in the practice. You will have the kind of a specialty firm working with you to amke your practice dreams become a reality.

You don’t have to be paralyzed by every financial decision that comes across your desk because you’ll have a team backing you. “Is that new procedure or equipment that I WANT, or something that we NEED?" The CFO should have an answer and help you make decisions like these, then take it a step further to evaluate the best way to pay for it. They will also chart a path to arrange financing if necessary so you can focus on being a dentist.

Cash Flow is Key
Once a predictable stream of cash begins pumping through your practice’s veins, the dentist can look homeward. You can save more for retirement – double or triple what you were before – and all of this comes without substantial changes in your lifestyle, either at work or at home.

Is anyone interested in increasing their retirement savings two to three times without impacting their personal lifestyle at home? The good news is you won’t have to change the way you work, you won’t have to bring in loads of new patients. Simply fixing what’s wrong with your current financial structures and systems will totally change your situation.

Whether you feel that you have a lot to improve upon or think you’re pretty close but just not willing to accept where things are, a dental CFO is simply the best investment that you can make in your practice, your career, and your family.

To find out how a Dental CFO can help your practice - contact our team today.

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3 Ways To Minimize Your Practice's Growing Overhead

Posted by Mathew Ryan on Thu, May 14, 2015

By Mathew Ryan
Financial Planner and Analyst
Four Quadrants Advisory

“Apple Pie” is a phrase that rolls off our lips with a smile.


How about “Meat Pie”? Not so smiley?

Change the adjective, change a lot!

“Overhead” isn’t such a bad word until you place the word “high” before it. After all, overhead is the operating expense of the enterprise that provides a living for you, your staff and their families – you gotta spend money to make money. But high overhead can undermine your practice by squashing cash flow and ruining plans for a transition or retirement.

So when does overhead go from controllable to destructive? And how can you keep from crossing that threshold in the first place? These are two questions we grapple with on behalf of our clients every day. And keeping it in check is central to what we do. We define that line as 60%

If you just gulped silently to yourself, it’s OK, you’re not alone.

Read the Guide: Financial Planning for Dentists

Dentistry is one of the five most expensive startup businesses in the United States, according to Inc. Magazine. Controlling overhead has gotten much more difficult with additional write-offs from insurance companies and their increasing control in a practice. Many of the clients we worked with arrived initially with an overhead above 75 and 80% or higher.

The causes of high overhead must be identified as early as possible or else a dentist will carry that overhead number over their heads like a dark cloud for the rest of their career. So here are three keys to bringing that overhead down from the stratosphere and into a lockbox.

1. Upgrade to comprehensive “dental” chart of accounts
2. Accurate reporting by month-end of the following month
3. Forensic analysis to make quick and timely decisions

With overhead BELOW 60% a new formula emerges: the lower your overhead the higher your cash flow; the higher your cash flow the better your income; the more you make, the more your practice is worth . . . I think you can see where this is going.

From a planning standpoint, the lower your overhead is, the wealthier you are and the healthier your practice is. What is your overhead currently? What have you done to lower it? Let us know by contacting us directly.

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